Foreclosure Freeze Slows South Florida's Residential Real Estate Sales

As banks suspend foreclosures, sales crucial in South Florida's troubled real estate market are in limbo.

By Toluse Olorunnipa

The decision by three major banks to freeze foreclosures will buy distressed homeowners months of extra time and temporarily block lenders from reclaiming homes.

But it also threatens to buckle South Florida's home sales.

Bank-owned properties make up about 40 percent of home sales in South Florida, and suspensions by JP Morgan Chase, Bank of America and GMAC could deliver a debilitating blow to that crucial segment of the embattled real estate market.

``People don't realize that this is our market,'' said Matthew Murray, a Realtor with Pat Dahne Realty Group who specializes in bank-owned sales. ``It's what's selling. If you delay the process, it's going to delay the recovery.''

There are mounting reports of approved foreclosure sales being stopped pre-closing, and buyers being left in limbo as banks try to deal with exposed ``robo-signers'' and unverified affidavits.

As the foreclosure moratoriums play out, a slowdown in low-priced, bank-owned properties coming through the pipeline could further hamper sales in South Florida, which depends on foreclosures more than most parts of the country.

The lenders have put the brakes on their foreclosure operations after bank employees and affiliates confessed they had been individually signing thousands of legal documents each month without verifying the details of the cases. Those documents, which contain crucial information like the amount owed and the owner of the note, have sparked allegations that thousands of foreclosure filings are tainted by fraud and forgery.

As paperwork issues stall sales, the hottest sector of the local market -- bank-owned properties, or so-called REOs -- lies at risk of going cold.

Together, the three lenders represent nearly a third of the local REO market. Bank of America, for example, has nearly 500 REO properties listed for sale in Miami-Dade and Broward counties, according to its website. GMAC, now known as Ally Financial, has at least 200 REOs in South Florida and JP Morgan has at least 250. Many of those properties have buyers and are currently pending sales, the banks' websites show. Other banks could follow suit in stopping foreclosure sales, although Wells Fargo announced Wednesday that it would not go that route.

IN LIMBO

Realtor Matthew Murray pointed out that most of his sales have not yet been affected, but other Realtors said bank suspensions have left some current sales in limbo and the future of the REO market uncertain.

Ashton Coleman, a Realtor with Keller Williams, planned to close on the sale of a North Bay Village condo this Friday before he got a letter from Bank of America saying the sale was being stalled.

``We figured that it would be fine since the bank already owned the property, but we figured that the bank probably found something wrong,'' Coleman said. ``The bank will be delaying [the sale] for at least 15 days, and for as many as 90 days.''

GMAC sent out letters to real estate agents last month alerting them that pending REO sales would be delayed an additional 30 days, Realtors said.

Anthony Askowitz, who has a few pending deals on GMAC-owned properties in Miami, said many of his buyers are investors, and have been willing to wait.

``If it's an investor, the investor is going to be able to handle it a lot easier than someone who has to move out of their current home by a certain date,'' said Askowitz, a broker and owner of two Re/Max offices.

But the depths of the foreclosure mess have not fully been uncovered, and no one knows for sure how long it will take lenders to clear up paperwork problems and re-start the foreclosure machine. With banks facing new calls for federal investigations and full-on foreclosure moratoriums, 30 days might not be enough.

HIGH-LEVEL CALLS

U.S. House Speaker Nancy Pelosi, Sen. Al Franken and Florida Congressman Alan Grayson are among those calling for bank probes and foreclosure halts across the U.S.

Most REO sales contracts have provisions that allow banks to halt a sale if issues come up concerning the property's title, said Murray, who added that has happened to him just twice in 20 years.

``The only way that happens is if they can't give you free and clear marketable title,'' he said.

Banks have authority to push these sales back for months, but not all buyers will be willing to hang around. Bank-owned properties are often abandoned and unkempt, and the longer a home stays empty, the more vulnerable it is to vandalism and disrepair, which can affect the home's value.

``It's in the bank's best interest to get this rectified as soon as possible,'' Askowitz said. ``So I don't think that this is going to drag on.''

Dennis Donet, a Miami foreclosure defense attorney, said that the despite the banks' desire to fix things quickly, legal battles could stall foreclosure sales for a year or more.

One of his clients recently learned that the sale of his foreclosed property was being canceled by its new owner GMAC, because of problems with the lender's foreclosure affidavit. Jeffrey Stephan, the GMAC employee who signed the affidavit, was exposed last month as a so-called ``robo-signer'' during a deposition. Stephan said he had signed more than 10,000 foreclosure documents each month, indicating that he had not taken the time to verify the details of each case.

LONG-TERM ISSUE

Donet has been talking with attorneys that represent banks, and said the general consensus is that questionable affidavits and lost documents will leave foreclosures hanging in the balance for a long time to come.

``There isn't anybody saying that this isn't going to be at least a six-month to one-year delay on the process,'' he said. ``Anything that interrupts the flow of capital is bad for the community.''

Reprinted courtesy of The Miami Herald: http://www.miamiherald.com/2010/10/06/v-fullstory/1861253/foreclosure-freeze-slows-home.html

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There is a new service now on the scene called PayBox. PayBox is in their pre-launch phase with the launch anticipated to be in 2011. As with any financial service, they need to have a solid customer base before they officially get off the ground.

As an incentive for new members, PayBox.me is offering 
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In addition, by logging in frequently to help them expand the service during the pre-launch phase, they'll pay you up to $20 per day.

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Sounds like a pretty sweet deal, so what's the catch?

Best I can tell thus far, the only catch is that you have to actually log into your account on a weekly basis to keep in active during the pre-launch phase. When you sign up, they don't ask for any proprietary information (no social security number, no year of birth, no first born). All you do is create a username and password and then subscribe to their blog. Simple.

My wife and I signed up and thus far everything is going as they've described. With any luck, PayBox.me will have a successful launch and we'll have an alternative to PayPal... which could mean that PayPal will finally have some competition and will have to reduce some of their fees.

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South Florida house prices: 'Price Reduced' becoming the new normal

As South Florida house prices are reduced, thousands of dollars in phantom equity disappear.

By Mary Shanklin, Orlando Sentinel 6:37 p.m. EDT, October 4, 2010

The "Price Reduced" sign in front of a house is showing up more and more on properties listed for sale in South Florida .

The percentage of homes with price reductions in Palm Beach County has risen to 26 percent of the market compared with 22 percent at the beginning of the year, according to the real estate research firm Trulia Inc. In Broward County, the percentage inched up to 18 percent from 16 percent.

Of the homes listed for sale in select ZIP codes in early September, the proportion with the wet blanket of a price cut ranged from 6 percent in Boynton Beach to 30 percent in Boca Raton andHighland Beach. And the average size of those discounts ranged from 7 percent in Boynton to 14 percent in Boca/Highland Beach.

In Broward, 14 percent of the listings in Coral Springs/Parkland had price reductions, while a quarter of the listings in Fort Lauderdale had price cuts. The average size of the reductions in those areas was 11 percent.

With the posting of every new "Price Reduced" sign on a street, thousands of dollars in phantom equity disappear.

"What we look at is the potential wealth lost, and the amount of equity they [homeowners] thought they had and didn't," said Ken Shuman, a spokesman for Trulia. "But if you live on a street with five houses for sale, and three are bank owned, you're going to have to adjust your price."

Discounts have become commonplace in South Florida . The median sales price in Broward fell last month to $206,700, about what it was in early 2004. In Palm Beach County, the median dropped to $227,800, a price last seen in 2003.

Michael Citron, a real estate agent for RE/MAX ParkCreek in Coconut Creek, said the first 30 to 45 days are the most important for a new listing.

If it's priced too high, it won't get any offers, forcing the buyer to cut the price. A house with multiple price reductions tells buyers that something's wrong, Citron said.

He said many sellers often have unrealistic expectations about their asking prices. "I always tell my sellers to price the home at or ahead of the market so they don't have to chase the market," Citron said.

If you have to unload the property as a "short sale" — that is, for less money than is owed on the mortgage — some agents suggest dropping your price 5 percent to 10 percent every seven to 10 days. Those attempting to sell a moderately priced home under ordinary circumstances should look at the competition in the neighborhood and adjust accordingly.

Reprinted courtesy of The Sun-Sentinel: http://www.sun-sentinel.com/business/os-house-price-breaks-zip-20100927,0,381799.story

Homes at Half Price for Firefighters, Police, Teachers

Good Neighbor Next Door program (GNND) offers homes at half price

TUESDAY, 28 SEPTEMBER 2010 By Elizabeth Martinez

Miami, FL- With the current market situation, and since the bursting of the mortgage bubble, foreclosure sales are attracting many buyers. Special deals like the one offered by the Good Neighbor Next Door program (GNND) is one that has received much attention.

Under the Federal Housing Administration (FHA) Good Neighbor Next Door program (GNND), homes are being sold at half price. This program is exclusively for buyers who are teachers, law enforcement officers, firefighters and emergency medical technicians, or EMTs. The homes being sold were insured by the FHA and foreclosed on. Now, the Department of Housing and Urban Development is selling them at half price.

However, there is more to take into consideration when you apply for this program. Buyers who meet the professional requirements must be willing to live in the neighborhoods where this program is being offered. For example, if a buyer is a firefighters or EMT, he or she must serve in the jurisdiction where the house is located in order to qualify. Similarly, teachers must teach at a school in the neighborhood boundary of where the house is located.

Once the buyer has met all of those requirements, the buyer then pays half the appraised value as determined by HUD. The other half which is the discounted half is taken as a "silent second" mortgage, with no principal or interest payments. If the house becomes the buyer’s primary residence for at least three years, then the buyer is forgiven from paying the silent second mortgage at the end of that time period. The owner may then keep the house or sell it and keep any profit. Payment of the first half can be made in cash, or the buyer can even borrow some or all of one-half of the purchase price.

The neighborhoods covered by this program are what the FHA calls "revitalization areas." These neighborhoods offer a combination of low household incomes, low homeownership rate and high number of foreclosures of FHA-insured properties. Therefore, these areas are not necessarily ideal, and they need fixing up.

According to the Department of Housing and Urban Development, the goal of this program is "to strengthen communities by encouraging employed, professional law enforcement officers, teachers and firefighters/emergency medical technicians to live in the community."

Reprinted courtesy of Mortage Lending News: http://www.mortgagelendingnews.com/top-news/11774-good-neighbor-next-door-program-gnnd-offers-homes-at-half-price

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Broward Law Firm Faked Foreclosure Documents?

Lawsuit claims that Florida's largest foreclosure firm faked documents

By Kimberly Miller, Palm Beach Post Staff Writer

Florida's purported largest foreclosure law firm filed thousands of documents to take people's homes that contained deceptive and intentionally ambiguous information, according to a proposed class action lawsuit.

The suit, filed last month in U.S. District Court, Southern District of Florida, says David J. Stern and his Plantation-based legal team violated the Racketeer Influenced and Corrupt Organizations Act by generating fraudulent mortgage assignments when pursuing foreclosures.

An assignment is held by the entity that has the right to receive mortgage payments.

Stern's practice, which the lawsuit claims filed up to 7,000 new foreclosure cases in Florida every month last year, also is alleged to have pursued foreclosures for lenders that didn't own the debt on the homes.

"There really is no proper plaintiff to sue and foreclose and that's what this charade is designed to cover," said Fort Lauderdale attorney Kenneth Eric Trent, who is seeking class action status and filed the suit on behalf of Oakland Park resident Ignacio Damian Figueroa. "There is no real holder of the note and the mortgage anymore because they broke it up and sold it to 10, 12, 20 people."

During the real estate boom, loans traded hands often, sometimes being bundled or split up and sold to investors.

Tracking the true owner of the debt sometimes can be a challenge. When pressed for proof of debt ownership, Trent said Stern's office would create an assignment signed by a Stern employee instead of a representative of the lender attempting to foreclose.

"The assignments were meaningless shells designed to pull the wool over the eyes of the judiciary and ease the burden upon the unknown real parties of interest," the lawsuit states.

Miami attorney Jeffrey Tew, of Tew Cardenas law firm, is representing Stern. He said Stern and his company have done nothing wrong, and that it is accepted practice for a firm employee to be given power to approve assignments.

"This foreclosure crisis was not created by David Stern, but it is so huge and a lot of people are in very bad shape, so some of the finger-pointing goes to him," Tew said.

Trent also named the Mortgage Electronic Registration Service Corp. as a defendant. The private entity, known as MERS, was created by banks in 1995 to track mortgage ownership electronically and reduce paper documents.

Trent says MERS helps hide the identity of loan ownership and that it conspired with Stern to "confuse everyone as to who owned what."

Tew called that claim "fantastical." He did acknowledge, however, that errors can happen.

West Palm Beach foreclosure defense attorney Thomas Ice found 21 examples last year of assignments from Stern's office that had been executed with a date before the notary's commission was issued.

In a deposition, a Stern employee agreed with Ice that "sloppiness" was to blame for the irregularity.

Palm Beach County Circuit Judge Meenu Sasser, who handles the county's foreclosures, said she's dismissed cases when she found problems with assignments. She wasn't speaking directly about cases filed by Stern, and said it's only happened a few times.

"I haven't seen any widespread problem," Sasser said.

Reprinted courtesy of The Palm Beach Post, original article appears here: http://www.palmbeachpost.com/money/lawsuit-claims-that-floridas-largest-foreclosure-firm-faked-839393.html

Florida Real Estate Market Has Hit Bottom - Univ of Florida

UF: Florida real estate market has hit bottom

GAINESVILLE, Fla. – April 29, 2010 – Florida real estate markets show the first tentative signs of recovering from the most painful recession in the state's history, according to the latest University of Florida (UF) report.

"Results of our first quarter survey indicate that the real estate market in Florida has hit bottom and is in the process of stabilizing across most property types," says Timothy Becker, director of UF's Bergstrom Center for Real Estate Studies.

But while most of the survey respondents report the market probably won't get any worse, few say it has actually begun to improve yet, Becker says. "One of our respondents summed it up by stating that 'if anything, we will get less bad.'"

On the positive side, private capital – both foreign and domestic – is continuing to enter the state in search of quality investment deals. As banks start to deal with their problem assets, more deals will come to market.

Another good sign: Life insurance companies have started to re-invest in commercial properties after backing off for the last year and a half, Becker says. Because these companies use premiums from life insurance policies to make investments, they are not deterred by the lack of available bank financing.

"(Life insurance companies) see the fundamentals of the economy stabilizing and they see the opportunity to get quality assets at a good price," Becker says. "So if they think things aren't going to get worse and they may actually get better, it follows that they're going to want to start investing again."

On the negative side, unemployment continues to be one of the state's biggest problems, edging up to 12.3 percent in March, its highest level since the state began keeping count in the 1970s. Florida has lost more than 880,000 jobs since 2007.

Although there is a potential for job growth later in the year, even under the most optimistic assumptions it will take three to four years to return to 2006 levels, Becker says.

Also of concern is the continued reluctance of commercial banks to lend money because of pressure from regulators to manage risks along with depressed values that make it difficult to refinance mortgages.

The retail and office markets are the worst off, Becker says. "Until there is an increase in job growth, there is no need for more office space, and people aren't spending as much money as they used to."

Apartments continue to be the best market in the state due to high demand from people moving out of foreclosed homes. "More people are going to be living in temporary spaces than trying to buy homes just because it's gotten a lot more difficult to buy homes from a financing perspective," Becker says.

Statewide, Florida's new housing market will continue to be slow, a result of more foreclosed homes becoming available. "That competition makes it very difficult for new homes to get built and purchased because buyers can often get an equal or nicer home for a much cheaper price on the foreclosure market," Becker says.

One of the strongest areas of the state is South Florida, especially Miami-Dade and Broward counties, with their diverse economies, steady migration and influx of foreign capital. "The glut of condos in South Florida is actually starting to change hands – they're beginning to rent them – and I think there is more life in downtown Miami than there has been in a long time," Becker says.

Orlando, Tampa and Jacksonville also are picking up. "Florida's big cities – those four areas – are less bad off than the rest of the state, and they're going to recover quicker than other places," Becker says.

Jacksonville, in particular, is in a good position because its housing market never got as hot as other markets; and, as a result, it doesn't have as many foreclosures. "I think Jacksonville is primed to really take off, and with the expansion of the port is going to have a lot of jobs coming into the marketplace," Becker says.

A positive note overall is that survey respondents' confidence in their own business has risen for the fifth consecutive quarter. In previous breakdowns by profession, developers and lenders had extremely low expectations for their own businesses, and that has grown substantially in the last few surveys.

"It's always a good sign for us that the lenders think their business is going to get better," Becker says. "Maybe it means there is some light at the end of the tunnel, even though we're still not at a great spot."

© 2010 Florida Realtors® Courtesy: http://www.floridarealtors.org/NewsAndEvents/article.cfm?id=238713